Why airlines in Nigeria hardly survive — Olowo
Elder Gabriel Olowo, President of Aviation Roundtable, a foremost think-tank in aviation, says that hostile operational environment makes Nigerian airlines last no more than 10 years. Excerpts:
Why are Nigerian airlines failing beginning with the defunct national carrier?
When you appoint and appoint and appoint wrong people on right seats, the question of corporate governance has always been there. And that airline (Nigerian Airways) failed. It was supposed to be repackaged and become a new carrier when then President Obasanjo said, ‘No, just go’.
Then the second generation - Okada, Kabo, Arco, etc - they all meant well. Okada said, ‘I want to prove to government that private sector can do this business’, brought a 747 at that time and that aircraft rot on the tarmac. It never flew; investment wasted. The aircraft was positioned to do Lagos-London but it never flew, that was on the side of government. And just like the Okada, Kabo, Arco, Hak Air within 10 years died.
People say the environment is too harsh?
The environment is very hostile for business and our civil servants in the aviation ministry are supposed to be preoccupied with advancement of that sector. If advancement bothers the civil servants in charge of every industry, aviation in particular, then you should be able to measure your progress from year to year. In the last 40 years where is the growth and if there is no growth there can be no development. So what is that ministry doing? Aviation Ministry, what are you set out to achieve? How come Ethiopian Airlines took over? How come South-Africans took over? What is that ministry doing?
What is the effect of the present economic downturn vis-a-viz naira devaluation on aviation and what is the way out?
It is quite simple. We have already got to the first phase of how airlines failed. I was taking you through history. We are trying to establish the mortality rate of our airlines, why has it been 10, 10 years? Arik is 10. Bell-View was 14 and I said 3040 per cent is due to management and owner-manager’s arbitrariness - success going into their heads so quickly and they ignored processionals and then government’s environment.
On the government side, the number one factor is foreign exchange which is highly volatile; it has always been like this in the last 40 years. In early 70s, exchange rate was around N4 to a dollar. During the Buhari-Idiagbon era, we faced this foreign exchange problem and airlines were running into what we call ‘blended rates’. You go to this bank, you got N4, you go there, you got N5, another bank would sell at N7. Foreign airlines were faced with that. About five airlines left Nigeria at that time. I was working for Varig Brazilian Airline, I was Deputy General Manager. The airline left this country because of foreign exchange. They had naira, they couldn’t get exchange. Iberia left, Scandinavian Airlines left, about five left because of forex instability.
The link between Nigeria and Brazil since that time remains high, there was big business during Buhari’s first coming. There was counter trade with Brazil. Volkswagen of Brazil was with Volkswagen Nigeria, there were pharmaceutical businesses from Brazil, among others, there was huge economic boost between the two countries. That was the effort of Buhari’s first coming that was wasted because the link got broken. Once the aviation link is broken, the economy is dead. We lost everything.
Now as far back as 1994, exchange rate was around N22 from N4. Nigerian airlines were selling a one hour of jet like Lagos-Kano, Lagos-Abuja for N2, 200 and exchange rate was N22, that is $100. LagosAbuja was a $100 value in 1994, that was 23 years ago. Now exchange rate has moved from N22 to almost N500 today and your fare, somebody is selling N16,000, $30, somebody in government should say, ‘hey, do you want to kill our people’.
If a Richard Branson came here and failed because of the same factors especially on the side of government, then who would not fail? Richard Branson is doing well in Australia, US, in Europe. Why did he fail in Nigeria? That is a case study for Ministry of Aviation, NCAA and all stakeholders. If Richard Branson failed in Nigeria, don’t blame Nigerian airlines at all.
So the investor confidence is not there and the CAA and the ministry who represent the government do not have the spine to do what they have to do. A responsible CAA would not allow what AMCON did to Arik. A responsible CAA would say, ‘AMCON, what is your objective’. An airline that went from 30 aircraft to nine and your eyes are wide open, did it drop in one day? Our CAA must be ready to see how liquid the airlines are.